Trudeau travels to India

Prime Minister Justin Trudeau’s visit to India this week will reinforce and underline our growing people-to-people ties. The economic relationship is less buoyant, but if Indian Prime Minister Narenda Modi can deliver on his promised domestic reforms, there is the potential for more two-way trade and investment.

With stops in Agra, Amritsar, Ahmedabad, Mumbai, as well as New Delhi, it will be a rare session that does not include some reference to family living or studying in Canada.

The Indian diaspora includes several members in the Canadian Parliament, with four members in the Trudeau cabinet. Nearly 4 per cent of Canadians claim Indian decent, with 40,000 Indians migrating to Canada last year. The 124,000 Indians studying in Canada are our second-largest group of foreign students. No surprise that tourism is also on the rise, with more than 210,000 Indians visiting Canada last year. There are daily and non-stop flights.

India definitely deserves Canadian attention.

India will soon surpass China in population, with one-sixth of humanity. It is also the world’s largest democracy, which is a cacophony of caste and creeds. The two Prime Ministers will empathize over the challenges of managing federations with strong sectional and regional pressures. Some of these, such as the Sikh separatist movement, play into Canadian affairs.

At the World Economic Forum in Davos last month, Mr. Modi was forceful in his embrace of globalization. He described his “New India” reform agenda and its pillars of structural reform: technological governance; physical infrastructure; business facilitation; and inclusive development. Designed to give “good administration and better amenities,” Canada needs to identify the niche opportunities within each pillar.

Trade and investment will figure in every discussion. Investment from Canadian pension funds in real estate and other sectors has picked up in the past couple of years.

With its steady GDP growth, India is expected to become the third-largest consumer market by 2025.

But Canada and India are still some distance from long-promised deals on foreign investment and closer economic relations.

The foreign-investment protection agreement negotiated by the Paul Martin and Stephen Harper governments that was concluded in 2007 has yet to be implemented. Free-trade negotiations began in 2010. The six-month “road map” to its achievement, that Mr. Harper and Mr. Modi enthused about during the Indian Prime Minister’s Canadian visit in April, 2015, has yet to materialize.

Much of the problem lies, as the World Bank consistently reports, with India’s trade restrictiveness. Mr. Modi talks a good show on reform and, while he is making some progress, the structural impediments are deep and entrenched.

There is also, notwithstanding Mr. Modi’s declaration in Davos, Indian protectionism.

The imposition late last year of a 50-per-cent import tariff on peas and a 30-per-cent tariff on chickpeas and lentils should be high on Mr. Trudeau’s discussions with Mr. Modi. Agricultural sales to India are a major market, especially for Prairie farmers.

Mr. Trudeau will likely get a receptive hearing on climate and the progressive trade agenda that can be parleyed into useful initiatives.

Mr. Modi will raise Indo-Pacific security and likely ask about Canadian capacity and capabilities. Indian policy under Mr. Modi has shifted from “Look East” to “Act East.” His “Neighbourhood First” policy is roughly analogous to the Trudeau government’s new “Strong, Secure, Engaged” defence policy. At last month’s Association of Southeast Asian Nations forum, there were discussions about the “congagement” – containment and engagement – of China. Mr. Trudeau should listen to Mr. Modi’s perspective.

With the Trans-Pacific Partnership now a reality and likely to be implemented later this year, our trade in the Pacific will only increase. It will oblige more attention and commitment to Indo-Pacific security.

The tempo of Indo-Pacific activity by our Esquimalt-based warships has picked up. HMCS Chicoutimi, one of our Victoria-class submarines, is completing a nearly six month successful Pacific exercise that also took it to Japan. If we want to be seen as a serious Indo-Pacific partner, the current tempo will be seen as the bare minimum.

Mr. Trudeau’s India visit is his longest yet to a single country. The Indian backdrop will provide a spectacular picturesque travelogue against a celebration of family ties. But real success will also require serious and continuing conversations on trade and security.

A Conversation with Indian High Commissioner Vikas Swarup

February 12, 2018

On today’s Global Exchange Podcast, we speak with the Indian High Commissioner to Canada, Vikas Swarup. Join Colin and High Commissioner Swarup for a discussion on the High Commissioner’s career, his impressions of Canada, the importance of Canada-India relations, and the significance of Prime Minister Justin Trudeau’s upcoming visit to India.

Participant Biographies

  • Colin Robertson (host): A former Canadian diplomat, Colin Robertson is Vice President of the Canadian Global Affairs Institute.
  • Vikas Swarup: High Commissioner of India to Canada.

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Trudeau in California

Trudeau to meet with Amazon, eBay CEOs on 4-day U.S. trip

Prime minister to promote trade, look for investment while visiting Illinois and California

By Katie Simpson, CBC News Posted: Feb 07, 2018 4:00 AM ETLast Updated: Feb 07, 2018 10:36 AM ET

Prime Minister Justin Trudeau is expected to use his meetings with influential American CEOs to remind U.S. lawmakers about the importance of NAFTA

Prime Minister Justin Trudeau is expected to use his meetings with influential American CEOs to remind U.S. lawmakers about the importance of NAFTA (Adrian Wyld/Canadian Press)

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Prime Minister Justin Trudeau is gearing up for four days of critical meetings with lawmakers and business leaders as he heads out on yet another trade and investment mission to the U.S.

But Trudeau has one closed-door discussion planned that’s certain to get more attention than the rest.

On Thursday, he will be meeting with Jeff Bezos, CEO of Amazon. The tech giant is in the middle of its search for a second headquarters — and Toronto is on the short list.

Trudeau will be under pressure to make a strong pitch on Toronto’s behalf during his face-to-face meeting with Bezos.

Amazon plans to spend up to $5 billion US on its second headquarters, which it says will create 50,000 new high-paying jobs.

More than 200 cities in Canada and the U.S. bid for the facility, but Toronto is the only Canadian city still being seriously considered for the new location.

Canada’s largest city is up against several major U.S. hubs, including Boston, New York and Chicago.

Familiar trade pitch

The Bezos meeting is just one aspect of Trudeau’s trip south of the border.

Over the next four days, he will visit Chicago, San Francisco and Los Angeles to promote NAFTA and the importance of the Canada-U.S. trading relationship.

Former Canadian diplomat Colin Robertson calls these types of missions essential to the Canada-U.S. relationship.

“I think the one thing Donald Trump has taught us is that you can’t take the U.S. for granted,” he told CBC News.

TRADE-NAFTA/

U.S. President Donald Trump welcomes Trudeau at the White House on Oct. 11, 2017. ‘The one thing Donald Trump has taught us is that you can’t take the U.S. for granted,’ former Canadian diplomat Colin Robertson said of the current U.S. president. (Jonathan Ernst/Reuters)

“We do not make enough trips into the United States, given the relative weight of the United States and its importance on the Canadian economy.” 

The pitching begins in Chicago, where Trudeau will deliver a keynote speech today at the University of Chicago and participate in a discussion with David Axelrod, former U.S. president Barack Obama’s chief election strategist.

Before the event, he will sit down with several political leaders, including Illinois Gov. Bruce Rauner and Chicago Mayor Rahm Emanuel, who also served as Obama’s first chief of staff.

Trudeau is expected to use the meetings to remind U.S. lawmakers of the importance of NAFTA at a critical point in the re-negotiation process.

The sixth round of NAFTA talks ended in Montreal last month with all sides agreeing that progress has been slow.

Since then, new signs of hope have emerged that suggest a deal may be possible.

Canada’s ambassador to the U.S., David MacNaughton, told an audience in Ottawa on Monday that he’s pressuring negotiators to wrap up discussions in the next two months.

On Tuesday, U.S. Secretary of Agriculture Sonny Perdue told a U.S. House of Representatives committee that he believes a deal could be reached by December.

‘Go north’

Trudeau will shift his focus to the tech sector on Thursday as he heads to San Francisco, where he will meet with Bezos. But he also will sit down with other influential business leaders, including the CEOs of online shopping giant eBay and pharmaceutical developer Amgen.

The tech sector leg of the visit wraps up with a dinner at the Business Council to discuss new investment opportunities in Canada.

Trudeau’s pitch likely will include the fact that Canada has joined the new Comprehensive and Progressive Trans Pacific Partnership (CP-TPP). The U.S. did not sign on to the pact, which also includes Japan and Australia.

“I think this might be of interest to some American exporters,” said Michael Kergin, Canada’s former ambassador to the U.S. “They can use some subsidiaries in Canada to work through the Asian markets as well.”

Kergin also said the business tax cuts introduced by U.S. President Donald Trump last month won’t necessarily hurt Trudeau’s pitch to the high tech sector.

“Knowing where you can get good markets and good people to work with you … I think is more important than the tax issue,” he said.

Trudeau also may look to urge Canadians working in tech industries in the U.S. to start coming home.

“There’s a ‘Go north’ campaign on right now,” Robertson said. “All the bright young engineers from Sheridan College that worked at Pixar … and from Waterloo that went down to Silicon Valley. If we can bring some of them back … that would be great for Canada.”

While in San Francisco, Trudeau will meet with more lawmakers, including California Gov. Jerry Brown.

Trudeau ends his trip with two days in Los Angeles. While there, he will deliver a second keynote address — this time to a primarily Republican audience at the Ronald Reagan Presidential Library and Centre for Public Affairs.

Trudeau's U.S. tour

The prime minister is set to meet with some of the most influential leaders in the tech industry as he launches a four day trade and investment mission to the U.S. (Rob Easton/CBC)

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The Canadian Chamber of Commerce is suggesting the more than 200,000 companies in its network renew any permits required to do business in the United States sooner than later in case U.S. President Donald Trump’s administration scraps the 24-year-old North American Free Trade Agreement (NAFTA) between Canada, the United States and Mexico.

“We all live in hope that common sense will prevail at the end of the day,” chamber president and chief executive officer Perrin Beatty, a former Canadian cabinet minister, said in an interview with Xinhua Friday.

“However, we’re dealing with an administration that is very nativist and that is talking about putting impediments in the way of trade, which is not what we’re doing in Canada. We see engaging American businesses as a positive thing.”

Next Tuesday, American, Canadian and Mexican trade officials will convene in Montreal to begin the sixth round of talks to renegotiate NAFTA – a deal that Trump has opposed since his campaign for the presidency and which on Thursday he described as “a bad joke” on Twitter.

Retired Canadian diplomat Colin Robertson remains uncertain about the future of NAFTA, which he helped draft.

“If we were dealing with any other administration, I would say yes we would solve the differences. But because of Donald Trump, I don’t know. On a daily basis, you wonder where he is coming from,” said Robertson.

He said the U.S. president has recently sent mixed signals regarding Mexico, where he told the Wall Street Journal that he would be “flexible” on his threat to withdraw from NAFTA in light of this year’s Mexican presidential election, yet also said that Mexico would pay for his much-promised U.S.-Mexico border wall “indirectly” through changes to the trilateral trade pact.

Beatty said that during negotiations for the 1988 bilateral trade deal between Canada and the United States that preceded NAFTA, the dynamics that played out between Ottawa and Washington, D.C. were “quite different” of what they are now between both capital cities.

He said there was “a very close personal” friendship between U.S. President Ronald Reagan, a Republican like Trump, and Canadian Prime Minister Brian Mulroney, a conservative in whose cabinet Beatty served at the time as defense minister.

“Without that relationship, the Canada-U.S. Free Trade Agreement wouldn’t have been possible because there were so many vested interests that worked against trying to take down barriers and open up trade,” Beatty explained.

“In this case, we have an existing agreement that by any empirical standard has been very beneficial to all three countries. Logic would say you need a compelling reason not to continue with it. Yet what we’re dealing with here is a politically and ideologically driven approach to trade that often ignores the facts.”

Robertson, an Ottawa-based vice-president of the Canadian Global Affairs Institute, a foreign policy think-tank headquartered in the western Canadian city of Calgary, noted that Trump and Canadian Prime Minister Justin Trudeau will be in Davos, Switzerland next week attending the World Economic Forum where NAFTA will likely be raised in any conversations between both leaders.

But ultimately the hard work will occur at the negotiating tables, and Robertson believes there are three possible outcomes to next week’s talks in Montreal, which have been extended by one day to Jan. 29.

Either a deal will be reached and sent to the U.S. Congress for approval; or negotiations will be suspended at the end of March following their eighth round in Washington, and moved to technical discussions without ministerial meetings until 2019 after the Mexican presidential inauguration on Dec. 1; or Trump rescinds the agreement and U.S. Trade Representative Robert Lighthizer “will blame Canada and Mexico for failing to show a willingness to compromise,” according to Robertson.

The latter scenario is plausible since neither Canada nor Mexico is willing to budge in their insistence that a NAFTA provision that allows for bi-national panels to review anti-dumping and countervailing duties remain. Trump’s administration wants that dispute-resolution mechanism dropped and have U.S. courts as the final arbiter in challenges to American tariffs.

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Trump first president in 40 years to not visit Canada

Donald Trump becomes the first president in 40 years not to visit Canada in his first year

At midnight Sunday, Donald Trump will become the first U.S. president since Jimmy Carter not to visit Canada in his first calendar year in office, though former diplomats said they would not make too much of Trump’s absence.

U.S. President Donald Trump and Prime Minister Justin Trudeau at an Oct. 11 meeting at the White House.
U.S. President Donald Trump and Prime Minister Justin Trudeau at an Oct. 11 meeting at the White House.  (DOUG MILLS / NYT file photo)  

WASHINGTON—Ronald Reagan made his first presidential trip to Canada four months into his term.

George H.W. Bush visited Canada just three weeks into his term.

For Bill Clinton, it was two-and-a-half months. For George W. Bush, it was three months. And for Barack Obama, it was one month.

Donald Trump? To be determined.

With 2017 about to end, Trump is set to become the first U.S. president in 40 years, since Jimmy Carter, not to visit Canada in his first calendar year in office.

For four of the six presidents who preceded Trump — Obama, Clinton, George H.W. Bush and Reagan — Canada was the very first foreign destination. For Trump, it will be, at earliest, the 15th, and probably lower.

Trump is likely to attend the G7 summit in Quebec in June. There are no current plans for him to come earlier, though Prime Minister Justin Trudeau, who has visited Trump twice at the White House, has issued invitations.

“The PM and president have developed a constructive, positive working relationship and have spoken or met on numerous occasions,” Trudeau spokesperson Cameron Ahmad said in November, noting that the two leaders have had “17 individual interactions” since Trump was elected. “Our offices, diplomats, ministers, and officials communicate regularly on many key files and shared priorities. The prime minister has extended an invitation to the president to visit Canada and continues to look forward to future opportunities to engage.”

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By most accounts, including Trump’s own, the 46-year-old multilateralist Liberal prime minister and the 71-year-old nationalist Republican president have developed a friendly working relationship. Even as he disparages the North American Free Trade Agreement that Trudeau supports, Trump regularly tells audiences he likes Trudeau.

On Thursday, in an interview with the New York Times, Trump referred to “my friend Justin” while inaccurately describing the state of bilateral trade.

“What’s important is the meetings and discussions and the dialogue, not where they’re taking place. And they certainly have been taking place; they just haven’t been taking place in Canada,” said David Wilkins, the U.S. ambassador to Canada during George W. Bush’s second term.

Wilkins noted that Obama followed his prompt visit with years of delay on the Keystone XL oil pipeline that was a top priority for the Canadian government, then eventually rejected the pipeline. Trump, conversely, rapidly approved the project.

“What’s more important, a visit or the approval of a vital pipeline?” Wilkins said.

Prime Minister Justin Trudeau and U.S. President Donald Trump speak at the July G20 summit in Hamburg, Germany. Though he disparages the NAFTA agreement Trudeau supports, Trump has said he likes Trudeau.
Prime Minister Justin Trudeau and U.S. President Donald Trump speak at the July G20 summit in Hamburg, Germany. Though he disparages the NAFTA agreement Trudeau supports, Trump has said he likes Trudeau.  (Ryan Remiorz)  

In part, Trump’s decision not to visit may reflect a coincidence of scheduling: no international summits have been held in Canada this year. It also likely reflects what appears to be Trump’s desire to avoid going places where he might face protests. And Trump has often appeared more comfortable dealing with non-democratic leaders than with traditional western allies.

His first visit was to autocratic Saudi Arabia, which flattered him with an opulent reception. His second was to Israel, the rare democracy where he is popular.

On his first European trip, he attended a G7 summit in Italy and a NATO summit in Belgium. On his second, he attended summits in Poland and Germany. His five-country Asian trip took him to Japan, South Korea, China, Vietnam and the Philippines.

Trump has accepted a lone invitation for a one-stop visit of the kind Trudeau would be offering, visiting France in July to attend a grand military parade with President Emmanuel Macron.

Analysts see the relationship between Trudeau and Trump as especially important to Canada given the precarious status of NAFTA, which is under Trump-initiated renegotiation. But Trudeau, said former Canadian diplomat Colin Robertson, is not in a political position to provide the kind of lavish treatment and protest-free surroundings Trump has made clear he prefers.

“If Trump came to Canada, the adverse reaction could damage the relationship given Trump’s king-size ego,” said Robertson, a fellow at the Canadian Global Affairs Institute. “He’d probably hold Trudeau accountable, and after the extravagant Saudi red carpet treatment we could never compete — nor would we want to, given the blowback Trudeau would get.”

Trump has not yet visited Mexico, where he is deeply loathed. And he has not visited the United Kingdom, the most frequent destination for U.S. presidents since the Carter era. After a series of delays that appeared to be related to Trump’s local unpopularity and his incendiary remarks, he is now expected to visit Britain in early 2018.

Carter, who served a single term, was the last president never to visit Canada. Obama visited three times during his eight years in office. Ronald Reagan, Bill Clinton and George W. Bush (who all served two terms) and George H.W. Bush (who served one) each visited Canada four or five times.

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NAFTA Renegotiation is about USA

NAFTA renegotiation dependent on America’s future path as a nation

  • Corwyn Friesen, mySteinbach
  • Posted on 12/20/2017 at 10:00 am

The Vice-President of the Canadian Global Affairs Institute suggests the fate of the North American Free Trade Agreement will depend very much on the direction the United States chooses to go as a nation.

Round five of discussions aimed at revamping the North American Free Trade Agreement is set for next month.

Colin Robertson, the Vice-President and a Fellow of the Canadian Global Affairs Institute, says while the creation of the Canada U.S. Free Trade Agreement and the North American Free Trade Agreement were mostly about Canada and Mexico and have been key to expanding the roles of Canada and Mexico as international traders, the renegotiation of NAFTA is focused on the United States.

This is all about the United States and whether the United States still wants to play the role of leader in the international system that it created after the second world war.

It’s been the steward of the architecture of the United Nations, the World Bank, the International Monetary Fund, the World Trade Organization because it believed it was in the United States’ interest to act as leader and to set what I call the general operating system for the global, whether we’re talking about economics or peace and security.

Donald Trump takes a different view. Donald Trump talks about America First, Buy American and Hire American and he’s turned his back on multilateralism. He wants to renegotiate the trade agreements. In the American Interest he wants to use trade agreements to balance trade. This is something we’ve never seen by a developed economy.

~ Colin Robertson, Canadian Global Affairs Institute

Robertson says this debate is all about the United States and what kind of nation it wants to be. He says although Canadians are making major efforts to remind the Americans that we are a reliable trade partner, a reliable ally and a good friend and neighbor and Mexico is doing the same, this will all be up the Americans which why where America goes on this in Congress, at the state level and in the administration is so important.

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Why Halifax International Security Forum matters

What to expect from the 2017 Halifax International Security Forum

Participants will talk North Korean nuclear weapons and women in international security


Defence Minister Harjit Singh Sajjan at last year’s Halifax International Security Forum.   Katie Short

Participants from 91 democratic countries are in Halifax this weekend for the Halifax International Security Forum (HISF).

From Friday to Sunday 300 people will gather at the Westin Nova Scotian, including prominent politicians, military officials, business leaders, journalists, academics and NGO workers from around the world. Canadian Defence Minister Harjit Sajjan will host the event.

Robin Shepherd, the senior adviser for HISF, said this year’s main discussion topics will be ISIS, Russia, the NATO alliance, North Korean nuclear arms and women in international security.

“This is a sort of conference that has a set of core values that we believe in, you know, liberal democracy, and that certainly does make it different from other conferences,” he said.

Attendees participate in on-the-record panels as well as smaller, off-the-record talks, which Shepherd says allows for more frank and productive dialogue.

“You can be sick to death of conferences and summits where diplomats just give the official line,” said Shepherd, who previously worked as the Moscow bureau chief for The Times of London. “It’s really refreshing to have the opportunity to really delve deep into issues and try to shift the terms of debate.”

Shepherd will moderate sessions featuring the Secretary General of NATO, the chief executive of the Islamic Republic of Afghanistan, and the executive chairman of Alphabet Inc., Google’s parent company.

‘All about jaw-jaw’

Since 2009, the forum has seen more than 300 participants from 91 democratic countries and their international delegations come to Halifax. Canadian Defence Minister Harjit Sajjan travelled to Nova Scotia to host this year’s event.

Since it began in 2009, the conference has hosted a number of high-profile keynote speakers. Last year, U.S. Senator John McCain was tipped off about a dossier that contained potentially incriminating links between president-elect Donald Trump and the Russian government.

Colin Robertson is a former Canadian diplomat and current vice president of the Canadian Global Affairs Institute—he has attended HISF multiple times and will again this year. He said the forum is about conflict prevention.

“I do think it’s something Canada has done that really makes a difference,” said Robertson. “As Churchill said, ‘it’s always better to jaw-jaw than war-war, and this is all about jaw-jaw.’”

Robertson suggests the big draw is access to other participants. He said the formal plenary sessions are interesting, but “almost incidental” to smaller bilateral meetings. In groups of 15-20, participants leave the Westin on Saturday night for dinners at restaurants around Halifax, he said. Those talks are off-the-record.

‘Not some innocent confab’

Allan Bezanson, spokesperson and organizer for the local activism group No Harbour for War, opposes what Bezanson calls “militarist solutions” to international security issues. The group is planning an “anti-war rally” for Saturday afternoon.

Bezanson does agree with Robertson on one point—participants come to HISF to talk to each other, informally.

“The important thing about these conferences is it gets these people together so they can mingle in the hallways and in the hospitality suites, and all that, and work out their plans,” said Bezanson.

While both Robertson and Shepherd point to this mingling as a productive and convivial feature of the forum, Bezanson considers it suspect.

“It’s not some innocent confab; it’s very serious,” he said.


The HISF is held at the Westin Nova Scotian in downtown Halifax.   Cory Funk

Public and private sponsors

HISF was created in 2009 with funding from the Canadian government and the German Marshall Fund, a Washington, D.C.-based non-profit. The event was initially the “vision” of former Canadian defence minister and Nova Scotia MP, Peter MacKay, according to a 2015 media release.

In a phone interview, MacKay said he and HISF president Peter Van Praagh wanted to replicate similar forums from around the world.

“Among my various travels I had attended security forums in places like Munich and Brussels and Estonia and the Baltics, and these big international gatherings to me seemed like a very good forum to have discussions,” he said.

The Canadian government was a sponsor from the beginning, but MacKay wanted HISF to move away from that funding model.

“The intention was always that it would become completely independent of government funding, and more arms length,” he said.

According to their website, HISF became an independent non-profit organization in 2011. Today, it receives funding from public and private sponsors, including the Canadian Department of National Defence and Air Canada.

The forum is paid for by a public-private partnership, including the Atlantic Canada Opportunities Agency (ACOA) and the Department of National Defence. The defence department allotted $3.3 million for this year’s forum, while ACOA contributed $250,000.

Halifax impact

Former Canadian defence minister Peter MacKay said it’s a boon for the community of Halifax.

“People who probably wouldn’t be coming to this city otherwise, you have a weekend where the hotel is full, taxi cabs are being used, restaurants are being used,” he said in an interview Friday. 

Glenn Bowie, area director of sales and marketing at the Westin, agreed with MacKay that the security forum has an impact on the local economy.

He said last year rooms were booked at 12 different hotels for the weekend. This year, 20 private planes refuel at Halifax Stanfield International Airport, pilots and crew book hotel rooms for the weekend, tables are reserved at 21 restaurants and more than 20 vehicles are chartered for moving delegates from one place to the next.

“It’s so good for our city and a lot of (other) cities would love to have it,” said Bowie.

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Trudeau to DC and Mexico

Trade troubles face Trudeau on trip to Washington and Mexico City

NAFTA tensions, Bombardier spat pose challenges for PM on 4-day visit to U.S. and Mexico

By Katie Simpson, CBC News Posted: Oct 10, 2017 5:00 AM

Prime Minister Justin Trudeau and U.S. President Donald Trump take part in a joint press conference at the White House in February. Trudeau plans to discuss NAFTA, security issues and NATO with Trump during his stay in Washington.

Prime Minister Justin Trudeau and U.S. President Donald Trump take part in a joint press conference at the White House in February. Trudeau plans to discuss NAFTA, security issues and NATO with Trump during his stay in Washington. (Sean Kilpatrick/Canadian Press)

Katie Simpson is a senior reporter in the Parliamentary Bureau of CBC News. Prior to joining the CBC, she spent nearly a decade in Toronto covering local and provincial issues.

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Prime Minister Justin Trudeau plans to talk trade, security and gender equality during his four-day trip to the United States and Mexico that begins Tuesday. But there is little doubt one of those subjects will get more attention than the others.

Trudeau is facing multiple trade-related challenges with both countries.

Talks on the North American Free Trade Agreement (NAFTA) have slowed and soured, with the mood expected to get worse, and Canada is frustrated by the U.S. decision to slap 300 per cent duties on Bombardier’s CSeries planes.

The softwood lumber dispute has also not yet been settled.

Trudeau arrived in the Washington area late Tuesday afternoon. He will also take questions during a keynote address at Fortune Magazine’s Most Powerful Women Summit in the evening.

Cultivating relationships

Trudeau will shift gears early Wednesday when he visits the congressional ways and means committee on Capitol Hill — an opportunity to share his message about the importance of Canada/U.S. trade with influential lawmakers.

On the eve of talks, U.S. President Donald Trump continued to threaten the viability of the deal, this time to Forbes.

“I happen to think that NAFTA will have to be terminated if we’re going to make it good. Otherwise, I believe you can’t negotiate a good deal… . [The Trans-Pacific Partnership] would have been a large-scale version of NAFTA. It would have been a disaster,” he said in an article published Monday.

“I consider that a great accomplishment, stopping that. And there are many people that agree with me. I like bilateral deals.”

Politics News
‘What would be terrible is completely going backwards and pulling out of this agreement’
00:00 07:01

‘What would be terrible is completely going backwards and pulling out of this agreement’7:01

Despite the president’s renewed threats, Congress has some power to intervene.

“Congress is potentially our shield against an administration which is the most protectionist that we’ve seen,” said Colin Robertson, a former Canadian diplomat.

Robertson thinks it is smart for Trudeau to ramp up his so-called charm offensive with U.S. politicians outside of the White House. 

“This is something he will have to continue to cultivate,” Robertson added.

Face time with Trump

But the most anticipated moment of the trip will be Trudeau’s face-to-face meeting with Trump.

The pair have developed a positive rapport, according to a spokesman in the Prime Minister’s Office, and are looking to further develop that relationship.

But their meeting takes place at the same time the fourth round of NAFTA talks begin, also in Washington. The PMO confirmed Tuesday those talks have already been extended so ministers from Canada, the United States and Mexico could all attend a meeting next Tuesday.

There is little positivity left at the negotiating table, especially as the U.S. is expected to make its most contentious demands during this round of discussions.

“I think they [the talks] are going poorly, they’re having difficulty even nailing down the low-hanging fruit,” said Jerry Dias, president of Canada’s largest private-sector union, Unifor.

Trudeau G20 Germany 20170708

Trudeau and Trump speak at the G20 summit in Hamburg, Germany, in July. (Ryan Remiorz/Canadian Press)

U.S. proposals on the rules for automobile content, dispute resolution and the dairy industry are expected to be unveiled this week. The U.S. has already been accused of making demands that neither Canada nor Mexico would ever agree to.

The PMO spokesman said Trudeau plans to discuss NAFTA, but noted that the real work is being done by negotiators behind the scenes.

Trudeau also plans to bring up Canada’s frustration with the U.S. Department of Commerce over the Bombardier duties.

Foreign Minister Chrystia Freeland has been outspoken on this issue, calling the duties “baseless and absurdly high.”

Trudeau also plans to discuss security with Trump, integrated operations and NATO, according to the spokesman.

Freeland and her parliamentary secretary on Canada-U.S. relations, Andrew Leslie, will accompany Trudeau to Washington.

Trudeau Apec 20161119

Trudeau will move on to Mexico City Thursday for a meeting and state dinner with Mexican President Enrique Pena Nieto. Both face increasing pressures from the Trump Administration when it comes to NAFTA. (Sean Kilpatrick/Canadian Press)

Meetings in Mexico

Trudeau will round out his North American tour with a stop in Mexico City.

President Enrique Pena Nieto has a full day of meetings planned with Trudeau and, again, trade will likely be the key point of discussion; so much so that International Trade Minister Francois-Philippe Champagne will join Trudeau and Freeland for this leg of the trip.

Canada and Mexico hold wildly different positions on several aspects of NAFTA, most notably labour standards.

But the prime minister’s spokesman says other issues will come up, including gender equality.

Trudeau is also expected to take some time to visit some of the regions hard hit by two earthquakes that struck this past summer.

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Can Trump pull out of NAFTA?

Can Donald Trump pull the U.S. out of NAFTA all on his own?

Some lawyers say withdrawal without congressional approval would be unconstitutional, but the politics of the play might be another matter

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NAFTA Primer for Canadians

A NAFTA Primer for Canadians

A_NAFTA_Primer_for_Canadians_Montages.jpg

by Colin Robertson
CGAI Vice President and Fellow

August, 2017

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Table of Contents


Introduction

After months of speculation, ministers and negotiators from Canada and Mexico fly to Washington this week to hear how the Trump Administration wants to change the North American Free Trade Agreement (NAFTA), the set of rules managing continental trade since 1994. Partnered with the Mexicans, Canada is well equipped to advance our own objectives and use the talks to even greater advantage.

The NAFTA re-negotiation is part of a bigger exercise by the Trump Administration aimed at reducing US trade deficits, bringing jobs back to the USA, and getting a ‘fairer’ deal for Americans in their trade agreements.

Market access and rule-making are the twin pillars of trade policy and this is what the negotiators will spend their time discussing. Seven rounds are scheduled from now until Christmas, when both the US and Mexico hope a deal can be done. The Trump Administration wants the deal through Congress well before the November, 2018 midterms. The Mexicans want it out of the way before their presidential election in July, 2018.

North America is home to over 480 million people and over one-quarter of the world’s economic output. That makes us one of the most competitive regions in the world, according to the Bush Institute. Under NAFTA, total trilateral merchandise trade has reached nearly US$1trillion, representing more than a three-fold increase since 1993.

With 77.8 per cent of our merchandise exports destined to our NAFTA partners, one in six jobs in Canada depends on trade. As Foreign Minister Chrystia Freeland observed, Canada’s economy is 2.5 percent larger every year, thanks to NAFTA: “it is as if Canada has been receiving a $20 billion cheque each year since NAFTA was ratified.”

But it is time to update our continental economic constitution.

The path that led to these negotiations has been contentious and, at times, acrimonious, especially in the wake of President Trump’s threats to ‘tear up the NAFTA’, build a wall on the Mexican border, deport ‘illegal immigrants’ and impose a border tax.

All three nations successfully negotiated new rules and improved market access in the Trans-Pacific Partnership (TPP) that President Trump pulled out of after taking office. The TPP, now under resuscitation efforts by the other 11 partner nations, including Canada and Mexico, involved many of the same negotiators. Inevitably, the stillborn TPP will be a reference point for chapters in a new agreement.

A NAFTA 2.0 must bridge some profound differences.

The Americans want to rescind the current dispute settlement process for countervail and anti-dumping cases, leaving Mexico and Canada to rely on the U.S. trade remedy system. For Canada and Mexico, this is a non-starter. A fair dispute settlement mechanism will be essential to any new agreement.

For Canada, the overriding objective is a deal that sustains and improves access to the US market. Trade with the U.S. (nearly three-quarters of our trade) accounts for an estimated 1.9 million Canadian jobs.

The border continues to be as much chokepoint as gateway. We made progress in the Harper era to reach beyond-the-border and to embrace regulatory cooperation. But this work needs a re-boot.

We have some house-keeping to take care of: the legislation enabling more US customs clearance operations for cross-border passage by air, sea and rail. We also need to figure out, with the US, how to manage the new refugee flow from the USA resulting from Mr. Trump’s immigration changes, real and anticipated.

The experienced Canadian team, having honed their skills negotiating free trade deals across the Atlantic and the Pacific, are well positioned.

First, surveys show that Canadians are confident in the Trudeau government’s ability to negotiate a good deal on their behalf. Canadians don’t like Mr. Trump. Neither do Mexicans or the rest of the world according to Pew surveys. The antipathy towards Mr. Trump will give the Trudeau government elbow room.

Second, the U.S. has taken the idea of a border tax off the table. This would have been a show-stopper. But the driving force for the tax came from House Speaker Paul Ryan, whose support for a re-negotiated NAFTA will be necessary.

Third, the economic auguries are good. Canadians are optimistic about their future prospects. The OECD projects unemployment in Canada (6.1 per cent) and the U.S. (4.3 per cent) at the lowest point in a decade – lost jobs are always blamed on trade – while growth in Canada (2.3 per cent) and the U.S. (2.4 per cent) will lead the G7. Mexican unemployment is at 4.3 per cent with growth projected at two per cent.

Fourth, there is broad public support in all three countries for continental free trade. A Pew survey conducted in May says NAFTA enjoys the support of three in four Canadians and six in 10 Mexicans. Surprisingly, half of Americans (51 per cent) say NAFTA has been a good thing for the US.

President Trump’s focus on NAFTA has brought hitherto silent support for NAFTA to the surface, especially in the U.S. farm community, a core part of the Trump base.  Their support for NAFTA is one reason why Trump decided to renegotiate, rather than scrap, NAFTA.

The Canadian outreach campaign –at the political level it has netted meetings with 50 governors and lieutenant governors and over 200 congressmen– has revealed that we have more allies than we thought for continuing our mutually-profitable continental trade. Canada and Mexico must continue cultivating their support. We will need it when the new deal reaches Congress.

The auspices for a new deal are good, but fasten the seatbelts. Negotiators will need to contend with threats and counter-threats, midnight tweets, and other noise.

Negotiations are traditionally conducted in secrecy but the US system is leaky by nature and by design and it is exacerbated by the current factionalism on Capitol Hill and within the Trump administration. To sustain public support Canadian negotiators will have to keep consulting with stakeholders and then explain, explain, explain.

Canadian governments should use the negotiations as an opportunity to improve Canadian competitiveness. Canadians want their governments to regulate for public safety and sovereignty but there are still thickets of red tape that need weeding. We need new and better connections – rail, road and pipe -to our ports. And we need to take another swing at inter-provincial trade barriers.

Trade promotion could do with a boost. Canada can compete continentally and globally as we proved in the decade of trade-led growth that followed the 1988 Canada-US FTA . The premiers have taken to sales and marketing like ducks to water. So should our big city mayors.

The ‘Canada brand’ is strong and, for now, Justin Trudeau represents the ‘face’ of Canada. Let’s leverage this into more trade and investment that creates and sustains jobs. As Canada’s top salesman, Mr. Trudeau needs to lead this parade.

 

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How did we wind up in negotiations?

During the remarkable 2016 American election campaign, Donald Trump called NAFTA the “worst trade deal ever” and promised to tear it up, along with the TPP and Trans-Atlantic Trade and Investment Partnership (TTIP).

After his election, the U.S. withdrew from the TPP. The TTIP was put in the freezer. Threats to “terminate” NAFTA continued until just after his 100th day in office when, as President Trump tells it, telephone calls from Prime Minister Justin Trudeau and President Enrique Peña Nieto persuaded him to “give renegotiation a good, strong shot.” Opposition from both sides of Congress and the farm community likely weighed significantly in the Trump decision.

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Who are the negotiators?

At the ministerial level, Robert Lighthizer is the United States Trade Representative (USTR). A long-time litigator and former USTR official during the Reagan era, he will work closely with Commerce Secretary Wilbur Ross, whom Trump has charged with overseeing the negotiations, with the support of Peter Navarro, Director of Trade and Industrial Policy. John Melle, a long-time senior official at the USTR responsible for North America, will direct the day-to-day negotiations.

Foreign Affairs Minister Chrystia Freeland, who previously served as Trade minister, will oversee the Canadian team. Steve Verheul, a long-time agriculture trade negotiator and chief negotiator for the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), will be Canada’s chief negotiator.

Ms. Freeland has also named an advisory committee of eminent Canadians including former Conservative leader Rona Ambrose and former Harper cabinet minister James Moore, Assembly of First Nations Chief Perry Bellegarde and Canadian Labour Congress president Hassan Yussuff. A Canada-U.S. cabinet committee chaired by Transport Minister Marc Garneau will keep watch. The NAFTA file will also sit prominently and permanently on Trudeau’s desk.

Mexican Economy Minister Ildefonso Guajardo will oversee the negotiations with veteran trade negotiator Kenneth Smith Ramos, currently director of Mexico’s NAFTA office in Washington, as their chief negotiator.

The negotiating teams will be drawn from the professional trade policy officers in government ministries. Canadian Chief Negotiator Steve Verheul told the Trade Committee (August 14) that there will be 28 tables of negotiators. They will be tasked to come up with language for the individual chapters e.g. procurement, intellectual property, services, of the new deal. Where trade policy was once about tariff rates it is increasingly about regulations around, for example, labour and the environment. Trade is now a horizontal issue that cuts across government.

In addition to the input from their respective executive offices, domestic agencies and departments, the negotiating teams will also rely on advice from their respective ambassadors: Canada’s David MacNaughton in Washington and Pierre Alarie in Mexico City;  Mexico’s Dionisio Pérez-Jácome Friscione in Ottawa and  Geronimo Gutiérrez Fernández in Washington; the U.S.’s Kelly Knight Craft in Ottawa and Roberta Jacobson in Mexico City.

The Mexicans, in outlining their objectives, described well the actual negotiating process:

“As in all negotiations, in the modernization of NAFTA, there will be different levels of interaction between the negotiating teams of the three countries. At the technical level, those responsible are the negotiating heads. At a next level, there will be the undersecretaries or their equivalents, who will be in charge of advancing those topics that after the technical work so require, and at the strategic level will be the secretaries or ministers who will lead the negotiation process in each country.”

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How long will the negotiations last?

The preliminary negotiations will begin in Washington on Aug. 16 for three or four days, after which the negotiating teams will go home, take stock and reconvene at roughly three-week intervals, likely rotating between respective capitals (or cities with direct air connections), with seven scheduled rounds before Christmas.

Both Mexico and the U.S. would like the negotiations over by Christmas or early in the New Year lest they intrude into their election cycles. The TPA, which enabled the negotiations, expires in July although there is a provision to extend it. Mexico will elect a new president, Chamber of Deputies and Senate in July. U.S. midterm elections for the House of Representatives and one-third of the Senate take place in November.

The U.S. initiated these negotiations and while it wants an early conclusion, USTR Robert Lighthizer said in June that completing the negotiations by the year’s end was a “very, very quick time frame and we’re not going to have a bad agreement to save time.”  Under the TPA, the USTR will have to give Congress notice after negotiation of any agreement and this starts a process that can last up to six months before Congress holds an up or down vote on the agreement.

Trade negotiations almost always take longer than anticipated. It took four years, and a contested election in Canada, to negotiate and then implement the Canada-U.S. Free Trade Agreement. NAFTA took over three years, with elections in both Canada and the U.S. resulting in additional side agreements on labour and the environment. CETA, most of which will be implemented in September, took eight years. The Doha round of the World Trade Organization negotiations began in 2001 and there is no end in sight. The TPP negotiations started in 2006, with Canada and Mexico joining in October 2012. While agreement was reached in 2016, the U.S.’s withdrawal means it must be renegotiated before it can go into effect.

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What do the Americans want?

The U.S. objectives, mandated by congressional oversight in the Trade Promotion Authority,  reflected the input from dozens of meetings and formal hearings with stakeholders and over 12,000 comments received online through the Federal Register.

In mid-July Lighthizer submitted to Congress a summary of American objectives designed to “seek a much better agreement that reduces the U.S. trade deficit and is fair for all Americans by improving market access in Canada and Mexico for U.S. manufacturing, agriculture, and services … Since NAFTA was implemented in 1994, the U.S. bilateral goods trade balance with Mexico has gone from a $1.3 billion surplus to a $64 billion deficit in 2016. Market access issues have arisen in Canada with respect to dairy, wine, grain and other products — barriers that the current agreement is unequipped to address.”

The U.S. negotiating objectives also include the addition of chapters on the environment and labour (currently side agreements) and on the digital economy, including data flows,  as well as “to eliminate unfair subsidies, market-distorting practices by state-owned enterprises, and burdensome restrictions on intellectual property.”

The US had some specific asks of Canada including raising the Canadian customs inspection and duty (the de minimus level) threshold for imports entering by mail or UPS or FedEx from its current level of $20. The US level is $800 while Mexico’s de minimus level is $50. While e-commerce shoppers of Amazon, eBay and others would like this and it would lift some of the regulatory burden for small and medium sized business that depend on sourcing material from south of the border, Canadians retailers say this could put them out of business. But Perrin Beatty, Canadian Chamber of Commerce CEO got it right when he said that Canada is “literally spending dollars to collect dimes,” while “important trade facilitation programs and enforcement issues are not pursued as aggressively because of resource constraints.”

The US has also identified Canada’s protectionist dairy supply management system as a target. It needs reform. It deprives Canadians of choice (a 270 percent duty on foreign cheese beyond a tiny quota is a mighty deterrent) and does nothing to encourage development of our cheeses as a world-class premium product. But, when it comes to farm subsidies, the US is no slouch, with its support for American dairy, sugar, corn and other produce. The US also enjoys a 5-1 advantage in the dairy trade with Canada.

The US has also identified the rules of origin need to be enforced and better defined. Canada and Mexico want to preserve the rules of origin for autos establishing North American-sourced content at 62.5 percent. As Prime Minister Trudeau told state governors Canada and the US make things together. The auto trade is probably the best example and, as both Trudeau and Chystia Freeland have observed,  Ontario-based Magna “employs 62,000 Americans, 22,000 Mexicans, and 20,000 Canadians – building auto parts and components that rely on supply chains that crisscross the borders.”

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What do the Mexicans want?

The Mexicans, after similar consultations with industry, educators, agricultural groups and other stakeholders, tabled their objectives in early August. They want to strengthen Mexico’s growing energy sector. They want to protect intellectual property and to improve access for goods and services. They want greater labour market integration. They would like improved rules of origin to guarantee regional benefits. They want to unify agriculture, animal and health safety regulations. They want a stronger dispute resolution mechanism and all parties in the Mexican congress recently voted to sustain the bi-national panels (Chapter 19) that hear complaints about illegal subsidies and dumping and then issue binding decisions.

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What does Canada want?

In a speech at the University of Ottawa and remarks before the Standing Committee on International Trade (August 14) Foreign Minister Chrystia Freeland compared the negotiations to ‘renovating a house’ and laid out her main objectives:

  • Modernize the 23 year-old NAFTA to take into account the technological and digital revolution;
  • Make it a progressive “fair trade” agreement, using CETA as a model, through inclusion of chapters on the environment to address climate change, labour, gender equality, indigenous peoples;
  • Reforming dispute settlement to ensure governments’ have the right to legislate in the public interest with fair dispute settlement (Chapter XIX);
  • Improvements for business through easing business travel (Chapter XVI), cutting red tape and focusing more on harmonized regulatory cooperation;
  • Preserving supply management and cultural exception.

Consultations on NAFTA – the government has received over 21, 000 submissions –  have underlined the need to ‘Do no Harm’. Canadians understand that trade has worked to their advantage. Planning on the Canadian side falls into in three baskets:

Defensive Interests: We want to preserve the dispute settlement mechanism for countervail and anti-dump, i.e., NAFTA Chapter 19. Canada attempted unsuccessfully to have anti-dumping duties and countervailing duties done away with in the FTA negotiations in the mid-1980s but then settled for a dispute settlement system that was rolled into the NAFTA. We may have to push back on US efforts to broaden the scope of US trade remedy intervention around safeguard action and national security. If water is raised (doubtful), Canadian negotiators can be expected to enunciate longstanding Canadian policy and, if necessary, draw on the recent CETA agreement  that explicitly declares that water in its natural state is not subject to the terms of the agreement.

Modernization: This should be relatively easy to agree on especially on use of technology to create e-authorizations for customs clearance. This is already underway, but not completed, in the regulatory cooperation and beyond-the-border initiatives. Modernization, Minister Freeland and the negotiators told the Trade Committee, will also draw from the work already done in the TPP agreement and CETA. This could include the e-commerce chapter that Commerce Secretary Wilbur Ross has made a priority. Canada would not be unhappy to see the end – or reform – of the investor-state dispute settlement mechanism, i.e., NAFTA Chapter 11. As trade law expert Larry Herman chronicles, it has cost Canadian taxpayers a lot of money, especially with its successful application by U.S. industry over provincial government practices.

Offensive interests: Ms. Freeland has said she will push on the environment, labour, indigenous people, and gender equality. A consistent theme in the ongoing stakeholder consultations is the need more streamlining at the border. In some cases, the NAFTA provisions are not used because they involve too much work filling in forms and getting approvals. Canada wants to expand labour mobility to include occupations not included in original NAFTA (so as to cover, broaden the scope and depth of government procurement, and curb the application of U.S. trade remedy laws.

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Is NAFTA unpopular?

Support for NAFTA is lowest in the U.S., hardly surprising as most presidential candidates, especially Democrats, have consistently campaigned against NAFTA since its negotiation in 1992.

Bill Clinton campaigned against it in his election victory over NAFTA architect George H. W. Bush, but then embraced it as president (as did the Chrétien Liberals) after the incorporation of side deals on the environment and labour. But passage in Congress required an all-out White House campaign. Even then, most Democrats voted against its passage.

Donald Trump was especially critical of NAFTA in the 2016 campaign but Hillary Clinton also promised NAFTA reforms, as both she and then-candidate Barack Obama did in 2008.

The big change has been the shift in GOP support. It became free trade-minded with Ronald Reagan, and still enjoys significant support, if declining support, with Capitol Hill GOP. But Donald Trump mined the discontent of Rust Belt and working-class voters, who blame NAFTA for job loss and industry dislocation, even though technological innovation, notably robotics and its productivity gains, is more responsible.

Surprisingly, the recent focus on NAFTA has galvanized what public opinion surveys say is a quiet majority of support for continuing the North American free trade regime. This is especially significant in the U.S. because the negotiation and implementation of a new accord will depend on Donald Trump’s ability to achieve congressional agreement.

Both Canada and Mexico have launched unprecedented outreach campaigns in the USA involving their ministers, premiers and governors, and legislators at all levels of government as well as key business and labour stakeholders reaching out to their American counterparts and reminding them that NAFTA works for them as well. This effort will need to be sustained.

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In recent weeks, the major business associations in each country have all rallied around a renewed NAFTA. The national chambers of commerce of the U.S., Canada and Mexico have launched the North American Economic Alliance as a platform for an updated trilateral agreement on the principle of “do no harm.” The Business Council of Canada, the Business Roundtable and the Consejo Mexicano de Negocios have also warned about “disrupting supply chains that enable our companies and workers to produce globally competitive goods and services.”

There is also support from the auto workers. In a recent release, the leaders of Unifor Canada and the U.S. United Automobile Workers argue jointly for a deal “to raise wages and labour standards in Mexico; ensuring that autos and auto parts granted tariff-free access are actually made in North America and meet high enough content rules; structuring the agreement to achieve greater trade balance, and to ensure that workers in each country get a fair share of the benefits of the industry.”

Farm groups have also come out in support of NAFTA with U.S. Agriculture Secretary Sonny Perdue, a former Georgia governor, telling farmers that “First of all, the principle is: ‘Do no harm.’ Overall, agriculture’s done very well under NAFTA and we hope to continue that.”

The Canadian Cattlemen’s Association, the Confederación Nacional de Organizaciones Ganaderas in Mexico and the National Cattlemen’s Beef Association sent a joint letter to Trump, Trudeau and Peña Nieto urging them “not to jeopardize the success of the men, women and families engaged in the cattle and beef industries of each of our countries, who depend on the success that market access provides under NAFTA.”

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Recent polling on NAFTA

A recent Pew survey (May 2017) revealed that NAFTA enjoys the support of three in four Canadians and six in 10 Mexicans. Surprisingly, half of Americans (51 per cent) say NAFTA has been a good thing for the US.

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A recent Nanos survey of U.S. business (July 2017) revealed that 45 per cent of U.S. businesses think the U.S. economy is better off because of NAFTA, while 25 per cent think the economy is worse off and 13 per cent think there has been no impact.

After a decline in support for free trade agreements in general during the 2016 campaign, a plurality of Americans support them again, according to another 2017 Pew Research Center survey. According to Pew, political partisanship is linked to views of NAFTA, most notably in the U.S. In a switch of historical allegiance, about two-thirds (68 per cent) of Democrats but only 30 per cent of Republicans see NAFTA as good for the U.S. Gender, age and race also divide Americans with women, youth, Hispanics and African-Americans more likely to back freer trade.

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In Mexico, the Pew survey reveals that 59 per cent of those who identify with the governing PRI party and 68 per cent of those supporting the PAN (the party of former presidents Fox and Calderone) support NAFTA.

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Canadians like trade

Most Canadians back free trade. According to Pew, supporters of all three parties – Conservatives (83 per cent), Liberals (82 per cent), NDP (70 per cent) – say it has been a good thing for Canada.

Canadians have consistently backed freer trade since the early 1990s when the rewards of the Canada-U.S. FTA ushered in a decade of economic growth. That agreement was no sure thing with Brian Mulroney’s Progressive Conservatives fighting the 1988 election on the issue. They won a majority of the seats (with 43 per cent of the popular vote) but only carried three provinces – Alberta, Manitoba and Quebec – with the Liberals and NDP and most premiers opposed to the agreement.

Today, the Trudeau Liberals are champions of freer trade and a renewed NAFTA enjoys strong support from the Conservatives as well the premiers. The premiers and provincial legislators are vital to the Canadian campaign reminding Americans that we are their biggest export market and that trade with Canada generates an estimated nine million American jobs.

Recent surveys by  NANOS  and IPSOS reveal that the Canadian public has confidence in the Trudeau government’s ability to negotiate a good deal and people are also willing to cut the government a lot of slack in its NAFTA renegotiation. A recent Angus Reid survey also showed that Canadians are ready to make changes to the supply management system that protects the dairy and poultry industries but with a higher cost to consumers.

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What about softwood lumber?

Softwood lumber, or timber as it is called in the U.S., was likely the first trade dispute, dating back before Confederation to the George Washington administration when Massachusetts timber merchants (Maine was then part of Massachusetts) sought redress for competition from New Brunswick lumber used in shipbuilding. It has been a regular, unfortunate and visceral feature of Canada-U.S. relations for much of the last half century. The rancour over shakes and shingles almost undid the negotiations leading to the 1988 Canada-U.S. FTA. A series of carefully negotiated agreements have managed the trade but with the expiry of the 2006 agreement in September 2015 and inability to secure a deal in the year-long moratorium that followed, Canadian lumber producers are once more paying export duties.

At the crux of the dispute are our different practices on domestic support and taxation, with most U.S. timber harvested from private lands (as in our Maritimes) rather than public lands (as in the rest of Canada). Even though the industry is increasingly integrated in terms of ownership, there remain lots of small timber holdings, especially in the southeastern U.S., that view Canadian practices as subsidized by government. Any deal is likely to once more see a managed trade deal with a quota on Canadian lumber imports after which a levy would kick in. Any deal is also complicated by the requirement for the provinces – British Columbia is the biggest supplier, Alberta, Ontario, Quebec and New Brunswick – each with their own particular forestry practices, to agree on how they will divvy up the trade.

A deal may be in the making with Canadian supply capped at around 30 per cent of U.S. requirements. In the meantime, the Conference Board of Canada estimates that the U.S. levies will result in the reduction of 1,100 jobs this year, underlining the need for a deal as well as market diversification.

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What happens if we don’t get a new NAFTA?

If the US were to rescind NAFTA they would have to give six months’ notice of withdrawal (and this might be litigated given the US system). The NAFTA would stay intact between Canada and Mexico. Canada-U.S. trade would revert to the provisions of the 1989 Canada-U.S. Free Trade Agreement. If that were also rescinded, then the most-favoured nation (MFN) provisions negotiated under the WTO would apply with the U.S. MFN duty rate generally lower than the Canadian rate (2.2 per cent versus 3.2 per cent).

A more probable scenario is an impasse or breakdown in negotiations, as happened during the Canada-U.S. FTA talks. There could well be threats and counter-threats around retaliation. During the country-of-origin labelling (COOL) dispute, Canada and Mexico prepared a retaliatory list of goods on which they would apply higher duties. We would have targeted, for example, California wine.  California has the biggest congressional delegation and they did not look kindly on sacrificing their wine sales to protect ranchers.

This targeted approach in potential trade retaliation helped convince the U.S. Congress to rescind the COOL legislation in December 2016 and thus conclude a dispute that had dragged through both NAFTA and WTO since 2008. You can be sure Canada and Mexico will have a new retaliatory list in hand should, for example, plans for a border tax re-emerge.

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Did NAFTA work?

By any economic estimate NAFTA worked. But as the Council on Foreign Relations recently observed:

“Economists largely agree that NAFTA has provided benefits to the North American economies. Regional trade increased sharply [PDF] over the treaty’s first two decades, from roughly $290 billion in 1993 to more than $1.1 trillion in 2016. Cross-border investment has also surged, with U.S. foreign direct investment (FDI) stock in Mexico increasing in that period from $15 billion to more than $100 billion. But experts also say that it has proven difficult to tease out the deal’s direct effects from other factors, including rapid technological change, expanded trade with other countries such as China, and unrelated domestic developments in each of the countries. Debate persists regarding NAFTA’s legacy on employment and wages, with some workers and industries facing painful disruptions as they lose market share due to increased competition, and others gaining from the new market opportunities that were created… In the years since NAFTA, U.S. trade with its North American neighbors has more than tripled, growing more rapidly than U.S. trade with the rest of the world. Canada and Mexico are the two largest destinations for U.S. exports, accounting for more than a third of the total.”

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To underline the increasingly integrated nature of continental trade, a Wilson Center study concluded that Mexican exports to the U.S. market contain 40 per cent U.S. content and Canadian exports to the U.S. contain 25 per cent U.S. content.

But did NAFTA exacerbate social inequality? Did it unduly benefit some, i.e., investors, while failing to help with adjustment assistance or retraining those affected by trade and technological change? We can and have to do better in ensuring the gains of trade are broadly shared and that trade lifts all boats, not just the yachts.

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What is in a trade agreement?

Trade agreements set out the rules of the road for trade including how to manage disputes. Where once they focused on tariffs – the government levy on imports – they increasingly address regulations and standards.

NAFTA, now 23 years old, was pathbreaking in its scope and breadth and while it has remained evergreen, a revision to take into account, for example, the digital economy, makes a lot of sense. The TPP effectively would have achieved this goal and NAFTA 2.0 will probably resemble it, at least in its framework of the 30 chapters in both the TPP and CETA versus the 22 chapters in NAFTA. (see annex for the chapters)

A trade agreement begins with a preamble (declaratory and intended to be inspirational), objectives and general definitions. Then comes the heart of the agreement – trade in goods, technical barriers to trade, procurement, investment and services, intellectual property, anti-corruption, competition, labour, environment, competitiveness, regulatory coherence, transparency – and finally any other provisions and then annexes with specific obligations.

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Further reading

I learned my trade policy during the negotiation of the Canada-U.S. FTA, led by Simon Reisman, and then NAFTA, led by John Weekes. Throughout and since I have benefited from the tutelage of Michael Hart, Canada’s preeminent trade policy historian and the late Bill Dymond. With Michael in the lead, we wrote a book, Decision at Midnight: Inside the Canada-US Free Trade Negotiations, that is still a good primer on Canada-U.S. trade policy. Michael, Bill and I wrote the explanatory document to the FTA and then, as NAFTA was negotiated, Michael and I wrote NAFTA: What’s it all About. It was a big help in the NAFTA parliamentary implementation, until recently the biggest piece of implementing legislation, another reminder of the cross-cutting scope of trade agreements. Bill and Michael went on to direct Carleton University’s Centre for Trade Policy and Law that has spawned many able trade policy experts. One of the most notable is Dr. Laura Dawson who now heads the Canada Institute at the Wilson Center in Washington. With its sister institute for Mexico, headed by Duncan Wood, they are a continuing source of knowledge and inspiration on North American integration.

I have benefited over the years from the work of the Peterson Institute for International Economics and especially the thoughtful advice of Gary Hufbauer and Jeff Schott. The Peterson Institute continues to track NAFTA through its superb research, seminars and conferences on A Positive NAFTA Renegotiation.

The Bush Institute in Dallas has done excellent work on North American competitiveness and their mapping project, led by former diplomat Matt Rooney, deserves attention.

Scott Miller and Andrea Durkin at the Center for International Strategic Studies produce Trade Vistas, a great way to learn more about trade and trade policy.

The Council on Foreign Relations has done excellent work on North American integration. CFR fellow Edward Alden’s Failure to Adjust: How Americans Got Left Behind in the Global Economy (2016) is a must-read.

In Canada, the C.D. Howe Institute, the Conference Board, the Canada West Foundation and the Institute for Research on Public Policy have all given continuing attention to Canada-U.S. and North American trade policy. I recommend a recent series of IRPP essays on redesigning trade policy and the ongoing trade policy work of the Centre for International Government Innovation (CIGI). Agriculture Canada has a very good website with some superb graphics, including the ‘supply chain hamburger’. The Canadian Embassy’s state fact sheets are excellent.

For podcasts, listen to a quartet I recently hosted on The Global Exchange with fellow CGAI collaborators Laura Dawson and Eric Miller (in the aftermath of the U.S. objectives), John Weekes and Rob Wright (on the big picture), Sarah Goldfeder (on the U.S. process) and Lawrence Herman (on dispute settlement). Larry is Canada’s legal expert on trade disputes and his own website is a wealth of information.

For intelligent commentary on how we can improve North American economic integration, the SAGE (Strategies, Advocacies, Gateways, Engagement) group, a loose association of Canada-U.S. business groups steered by Dan Ujczo, is doing good work in reimagining the Canada-U.S. relationship.

The Pacific Northwest Economic Region (PNWER), led by the indomitable Matt Morrison, has an active group looking at specific proposals. The Council of the Great Lakes Region led by Mark Fisher has written to Trudeau and Trump with specific recommendations including expanding the integrated border enforcement teams (IBET) and creating a free trade zone in the region.

A lot of practical work is done by the North American Strategy for Competitiveness (NASCO) directed by Tiffany Melvin, Rachel Connell and Jennifer Fox (in Ottawa) and by the Canadian/American Border Trade Alliance led by longtime CEO Jim Phillips. The Canadian American Business Council (CABC), led by the irrepressible Scotty Greenwood, has put forward 10 useful proposals around Canada-U.S. trade including making permanent the Regulatory Cooperation Council; creating a zero-tariff zone; mutually recognized standards, testing and certification; revising procurement rules to include all jurisdictions, state and federal, in Canada and the U.S., i.e., buy “Canada-U.S.”; further integration of our energy potential through joint infrastructure and regulatory standards; easier movement by professionals; and more predictable border processing.  The best state-level Canada-U.S. business council is in Arizona and led by Canadian Honorary Consul Glenn Williamson. They make trade real. We should clone him and put him in every U.S. state.

The Canada-U.S. business relationship is an ongoing preoccupation for the Business Council of Canada, Canadian Chamber of Commerce, the American Chamber of Commerce in Canada, Canadian Manufacturers and Exporters and IECanada – Canadian Association of Importers and Exporters.

The case for North American integration is made in the tripartite report Building a North American Community (2005), sponsored by the Canadian Council of Chief Executives (now the Business Council of Canada) first led by Tom D’Aquino and now by Canadian chair John Manley (who succeeded Tom as CEO), the Council on Foreign Relations and Consejo Mexicano de Asuntos Internacionales. The Council on Foreign Relations published a subsequent report, North America: Time for a New Focus (2014) authored by General (Ret’d) David Petraeus and Robert Zoellick. Petraeus also authored The Next Great Emerging Market? Capitalizing on North America’s Four Interlocking Revolutions (2015) for Harvard’s Belfer Center. Eric Miller, John Dillon and I authored a report Made in North America (2014) for the Business Council of Canada.

The School of Public Policy at the University of Calgary, the School of Global Studies at the Universidad Anáhuac México Norte, the College of Public Service and Community Solutions, and the Morrison Institute at Arizona State University hosted the third in a series of conferences about the North American process. I have also benefitted from recent panel appearances with scholars including Carleton University’s Reisman Chair Meredith Lilly and Ottawa University’s Patrick Leblond.

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Appendix: NAFTA and the TPP

The NAFTA, TPP and CETA agreements are all available on the Global Affairs Canada website. Below are the chapters in the NAFTA and TPP (likely the framework model for a NAFTA 2.0).

NAFTA

Preamble

The Trans-Pacific Partnership (minus specific country-by-country obligations):

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Foreign Service

A foreign service worth fighting for

Somewhere between ‘golden age’ and ‘culture of complaint’ lies the state of Canada’s foreign service. OpenCanada’s Catherine Tsalikis interviewed nearly two dozen diplomats and experts to discover a gradual tarnishing of the diplomatic corps over the years — but many are rooting for its restoration.

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July 26, 2017
Illustration of Global Affairs Canada headquarters in Ottawa. Credit: Sami Chouhdary.

Like the Great Sphinx of Giza, from which its headquarters at 125 Sussex Drive took inspiration, Canada’s foreign service holds many secrets — the building’s nickname, ‘Fort Pearson,’ speaks to the opacity that surrounds many of its inner workings.

The exterior is clad in uninviting horizontal, concrete slabs. Through a canopied front entrance, and past security, is the wood-panelled Robertson Room, where Canada’s government hammered out its response to the 1989 Tiananmen Square protests, and where leaders from Germany, the United States and the Soviet Union met to discuss German reunification after the fall of the Berlin Wall.

In an homage to one of Canadian diplomacy’s signature moments, prominently displayed by the lobby’s windows is a perfect replica of Prime Minister Lester B. Pearson’s 1957 Nobel Peace Prize — the original now relocated to the new Canadian History Hall, which opened as part of the Museum of History’s Canada 150 exhibit.

While Confederation brought the colonies of Canada together 150 years ago, the foreign service isn’t quite that old. When Canada’s first Department of External Affairs was created in 1909, it was housed in a ramshackle office above a barber shop at Queen and Bank streets, and its main responsibility was to manage the flow of correspondence between Ottawa, London and foreign capitals. Though then-Prime Minister Wilfred Laurier had wanted to give the work of foreign affairs “the dignity and importance of a department by itself, as [was] done in other countries,” its beginnings were less than auspicious. Five blocks away from the East Block on Parliament Hill, where the prime minister and several ministries had their offices, the department was made up of only a handful of employees and had hardly any capacity to shape Canada’s relations with other countries.

The department did make it to the East Block a few years later, and over the first half of the 20th century its size and scope — and its diplomatic corps, the foreign service — grew modestly as Canada itself gained more autonomy from Britain over its international dealings. During the period following World War II through to the mid-1960s the department expanded rapidly, with Canada playing a leading role in the development of multilateral institutions like the United Nations and NATO, in what came to be seen by many as the ‘golden age’ of Canadian diplomacy — its zenith being Pearson’s Nobel Prize for the creation of a UN peacekeeping force during the Suez Crisis in the Middle East.

When Pierre Elliott Trudeau came into office, however, he brought with him a distrust of professional diplomats. “In the early days of the telegraph,” he told a reporter, “you needed a dispatch to know what was happening in country A, whereas now, most of the time, you can read it in a good newspaper.” Despite protest, in 1973 the department was moved to its present location, about a 10-minute drive from Parliament Hill, on the banks of the Ottawa and Rideau rivers.

Over the next few decades, the department’s makeup underwent much shape-shifting, with trade, immigration and development at various times consolidated under the foreign affairs banner or not. Most recently, under Justin Trudeau, the department’s designation became ‘Global Affairs Canada,’ which includes foreign affairs, trade and development.

Canada now has 1,174 foreign service officers and 179 diplomatic missions in 109 countries, up from 101 foreign service members and 22 missions at the end of WWII.

Behind these outwardly visible changes, however, there is a battle for the soul of the diplomatic corps unfolding, with fundamental questions about the role of a diplomat and the future of the service giving rise to, at times, fractious disagreement, according to interviews with almost two dozen current and former foreign service officers.

Glamour to grit

The foreign service has always had a bit of a challenging story to tell. Throughout the years, the idea of the ‘professional diplomat’ has for many conjured up visions of “dithering dandies” in pearls or pinstripes “lost in a haze of irrelevance somewhere between protocol and alcohol,” as former foreign service officer Daryl Copeland likes to say. That perception of course isn’t new; as one “riled career man” told The New York Times in 1970: “If I see one more caricature of a Canadian diplomat in striped pants sipping from martini glass holding a maple leaf olive pick, I’m going to burn my credentials card.”

But even in the 21st century, the average Canadian might find it hard to describe what the purpose of a foreign service officer is. Within the service, there is also existential angst about the role. While working for the diplomatic corps still holds a certain amount of prestige in the popular imagination, the reality on the ground is more than monogramed calling cards and canapés.

The foreign service is meant to be the government’s strongest advocacy instrument for defending Canada’s interests abroad — and the first line of defence when it comes to conflict prevention. The key elements of its mandate include working for international peace and security, promoting trade, investment and business opportunities for Canada’s economic benefit, and improving human rights around the world.

A few contemporary examples: helping to rebuild Bosnia after the 1992-1995 war; responding to the 2010 earthquake in Haiti; championing the cause of maternal and early childhood health in the developing world; and working to prevent the spread of Ebola in Africa.

The benefits that come from personal diplomacy — the nurturing of relationships with key international decision-makers to protect and advance Canadian interests — may be nebulous, but can tell in a crisis.

The last year has put into stark focus the importance of a strong diplomatic team abroad. When, following the election of Donald Trump, Canada’s most valuable trading relationship seemed in jeopardy, the diplomatic corps activated a network of influencers across the United States who had a stake in trade with their northern neighbour, setting up a dramatic 11th-hour reversal by the White House, which abandoned a pledge to withdraw from the North American Free Trade Agreement (NAFTA) and agreed to renegotiate the pact instead.

“The benefits that come from personal diplomacy may be nebulous, but can tell in a crisis.”

It was perhaps the biggest diplomatic coup to date for the new foreign minister, Chrystia Freeland, who was appointed to the post after throwing herself as trade minister into the task of rescuing a pact between Canada and the European Union from near defeat with direct personal appeals to decision-makers in Brussels.

Career foreign service officer Colin Robertson served at the Canadian embassy in D.C., among other posts, and was part of the team that negotiated the original NAFTA treaty. He said in-person dealings are still just as necessary as ever. “You need someone on ground to provide you with trusted perspective. In Washington, I spent all my time wandering around Capitol Hill. Nothing beats being there — face-to-face is still the best way to transact business.”

Robertson defends ‘cocktail diplomacy’: “I always went to cocktail parties, for two reasons: one, to see and be seen, and two, as the Romans say, in vino veritas — truth comes out over a glass.”

David Edwards, who spent three decades in the foreign service and retired in 2011, says he hasn’t heard much waxing on about “dithering dandies” in recent years: “People are actually on the frontlines, a lot of people have been shot at, we have people in Baghdad, in and out of Libya, Haiti…I think it has moved from glamour to grit.”

Former Canadian Ambassador to Ukraine Abbie Dann, who retired in 2013 after 33 years in the foreign service, likens being a foreign service officer to a calling, such as serving in the military, or feeling compelled to become a doctor or a human rights lawyer. “It’s not even a profession,” she said, “it should be considered a vocation. I’m Catholic, so I can use words like that.”

“I have 20 percent of my lung capacity, from pollution in Sao Paulo, Bombay and Kiev. And I’ve never smoked — lots of us are like that. Real foreign service officers are brought up a bit like the army: don’t explain, don’t complain, just get it done,” Dann said.

Michael Kologie, outgoing president of the Professional Association of Foreign Service Officers (PAFSO), agrees, and points out that the officers themselves are often not the only ones making sacrifices. “As diplomats, we have to remember that we are not just working from 8:30am-6pm — we’re representing Canada abroad 24/7. And it’s not just foreign service officers doing it, it’s their families that are doing it.”

One of the main purposes of the foreign service is to provide fearless advice and loyal implementation when it comes to the government of the day’s foreign policy, which necessitates close cooperation with Canada’s foreign ministers.

Lloyd Axworthy, who served as minister of foreign affairs from 1996-2000, says that when the Chrétien government was working on developing an ambitious treaty to ban landmines, Canadian embassy staff around the world “worked the streets,” in diplomatic parlance, with the goal of pulling off a treaty at the UN.

Thanks to the foreign embassy network set up under Pearson in the post-war years, Canada was able to draw on infrastructure in every region: “There have always been [those] in the Treasury Board saying oh, why do we need embassies in Patagonia, or something, and I said well, because they vote at the UN, they’ve got interests, and we never know when we’re going to need them.” In Axworthy’s opinion, the strength and ability of the foreign service has been one of the reasons why Canada has been able to play, when it wants to, an effective role on the international stage.

Barbara McDougall, Canada’s secretary of state for external affairs from 1991-1993, offers a more mixed assessment.

“There’s no question in my mind that the foreign service is the most professional of all the public service…That doesn’t mean that I thought they were always on top of their files,” she told OpenCanada.

In 1992, McDougall was the first Canadian foreign minister to visit South Africa for 30 years, timed to follow Nelson Mandela’s release from prison as a gesture of support for South Africa’s reforms following apartheid — though negotiations over the lifting of Canadian sanctions were just beginning.

In a kind of reverse example to Axworthy’s, McDougall said: “I don’t think our high commission there was at the kind of strength that it should’ve been. And you really notice when that happens, which tells you how good the foreign service is, when they’re at their best. Because when they’re not there, you notice.”

**

Tellingly, many of the current and former foreign service officers interviewed by OpenCanada pointed to Axworthy’s tenure — which saw the landmines treaty become binding international law — as the last ‘high point’ for Canada in international diplomacy.

By contrast, many said relations between the foreign service and its political masters reached a nadir under the government of Stephen Harper.

Of the atmosphere in the years before she retired in 2013, Dann said, “You could really feel it — they had an anti-elitist attitude. But it’s not an elite, it’s a profession first. Does it have some elitist aspects to it? Yeah — so does medicine, so does law, so does being a long-haul truck driver. You have to be really qualified to do it. That’s not elitist; that’s just being qualified.”

John Graham’s career with the foreign service spanned many decades, from spying for the Americans in Cuba in the 1960s to eventually being appointed ambassador to Venezuela and non-resident ambassador to the Dominican Republic. He sees an erosion of the service’s esprit de corps as starting earlier.

“You’re getting the voice of the dinosaur,” he told OpenCanada, “but this dinosaur has the impression that there were higher professional standards — the sense that it was a distinctive profession, with a culture of professional knowledge that you acquired as you moved through.”

Graham refutes the notion that the foreign service pre-Harper or pre-Chrétien was a “splendid, a well-oiled machine that most people were happy with — that was not the case. It’s important not to have a myth, a shining tower.”

Still, he is of the opinion that an “erosion” did indeed occur during the Harper years, and is concerned about the lasting effects.

“It’s very discouraging to note that a lot of the damage that was done by Harper is not being repaired,” he added. “That, I think, is an area really deserving of investigation.”

So, what have been the lasting effects of the Harper years? After almost a decade of cuts, has funding been restored? Has morale? And what gets lost when Canada isn’t playing at full capacity on the battlegrounds of diplomacy?

‘Yes men’ and ‘yes women’

Canada’s foreign affairs department is known to have taken a hit under the almost decade-long government of Stephen Harper, from severe personnel cuts to the muzzling of diplomats to the selling off of properties abroad. The 2010 failure to win a seat at the UN Security Council was a major diplomatic setback, and was held up as emblematic of the Harper government’s rejection of multilateralism. While many foreign service officers interviewed, like Graham, were careful to point out that Canadian diplomacy had seen low points before — the 1970 Times article also mentioned Pierre Trudeau’s “practice of depending on his own aides rather than professional diplomats for important advice and information” — Harper and successive Conservative foreign ministers seem to have left a mark on the psyche of the foreign service.

“I think they came in with a mistrust of the foreign service,” Axworthy said. “You heard all these horror stories. On the lecture circuit or while travelling I would hear ambassadors saying that they were told they couldn’t go to meetings, and if they were going to meetings their speeches had to be checked by the PMO or the PCO.”

While Axworthy said he never heard much outward sign of “rebelling or revolting,” the foreign service “went into a little bit of a fetal crouch for a while…they definitely lost a lot of good people, because they were just not being given much scope to advance.”

David Edwards remembers a dramatic shift in tone under the Harper government, with a pivot towards a projection of militarism. “We weren’t peacekeepers, we were warrior wannabes,” he said of Canada during the period, noting there was a change in the face and voice of the country when it was abroad. “If you were a soldier, you could speak to the press, but we couldn’t.”

Edwards gives the example of the 2010 Haiti earthquake: “The only people being interviewed were soldiers who had arrived 24 hours later. What about our people, who were there during the earthquake itself and during those first critical hours, who were actually living there?”

On top of tight message control, the government’s relationship with the civil service was perhaps put under even more strain by, as Graham puts it, “an absolute refusal to continue with the traditional culture of consultation with senior members of the public service. This certainly applied to the foreign service — senior people were not encouraged to consult with ministers. It was, ‘this is the policy and don’t ask questions.’”

This translated, Graham argues, into senior officials in the department being hired “at least in part because they were seen to be people who would not rock the party boat — they would be, to use a disparaging term, ‘yes men’ and ‘yes women.’”

“The foreign service ‘went into a little bit of a fetal crouch for a while.’”

This is a recurring critique offered by many who have served recently and by PAFSO.

Tim Hodges, who spent 25 years in the foreign service and served as president of PAFSO from 2014-2016, said there was “in effect a decade where you had management being promoted not just because they did the government’s bidding, because that’s our charge anyway, no matter who the government is, but [because] when asked to jump, they asked, ‘how high do you want me to jump?’”

Over time, Hodges said, bureaucrats from other departments were brought in at foreign affairs “in part to infiltrate the department, but [also] to bring it more in line.” While “not necessarily a bad thing,” Hodges thinks it had a negative result in this particular case. “Non-risk takers, centrists, were promoted up through the organization…talented personalities, yes, but that’s not the kind of people who would naturally think out of the box or think about new initiatives. And I think that’s a major downside currently for the department.”

Enter Justin Trudeau

Justin Trudeau came to power promising a restoration of Canada’s tradition of multilateralism and, in a Nov. 2015 letter to the ambassadors and high commissioners of Canada’s foreign missions, a “new era” in international engagement.

“My cabinet colleagues and I will be relying on your judgment, insights, discretion, and work ethic in advancing our interests. I have every confidence that your reporting and our interactions when I am abroad will provide a critical, factual basis for our policies,” Trudeau wrote.

Diplomats working for the newly renamed Global Affairs Canada at ‘Fort Pearson,’ where a siege-like atmosphere had set in, greeted their new political leaders with applause. One historian recently described it to OpenCanada as Trudeau “walking into the Pearson building and being received by the starving inmates with outstretched hands.”

The prime minister repeated his message at a rare meeting with 135 ambassadors and heads of mission in Ottawa last June. But while the tone coming from government with regards to the foreign service has definitely shifted back to a more traditional one, and while almost all of the diplomats who spoke with OpenCanada for this piece were happy to go on the record, interviews indicate that more than a year and a half since the Liberals took office, many are still waiting for the restoration of the foreign service to its former strength, standing and influence.

Abbie Dann now sits on the board of the Retired Heads of Mission Association. “All of us, the sort of ‘elders’ of the tribe, were very encouraged by the prime minister’s letter,” Dann said, “and from the type of ministers that have been put in, we’re hopeful. The [question] is, is that political will being really systematically pushed down through the department?”

Shift in tone aside, one publicly available metric by which to assess whether or not the foreign service is being built back up under the Trudeau government is funding. While total department spending is up slightly from the last year of the Harper government, Global Affairs’ Report on Plans and Priorities for 2017-18 suggests that more money for the foreign service is unlikely, given a projected drop in spending from $6.3 billion in 2016-17 to $5.4 billion in 2019-20.

And despite the Trudeau government’s “Canada is back” rhetoric, it has continued the Harper government’s strategy of selling off diplomatic properties. According to The National Post, as of June, 29 diplomatic properties have been sold since the Liberals were elected.

Michael Kologie, the outgoing PAFSO president, says he hasn’t heard of any new resources being allocated to the foreign service under Trudeau’s Liberals. In terms of personnel and positions abroad lost under the Harper government, Kologie “hasn’t seen any new life there,” nor has he seen financial increases to make up for rising costs of operating missions abroad and salaries increasing with inflation. “What that translates into is having to do more with less,” he said.

A Global Affairs spokesperson declined to comment specifically on whether additional funds have been allocated to the foreign service, and instead asked readers to refer to the departmental plan, which details funding for the entire department.

Daryl Copeland, who has written at length on his ideas for reforming the foreign service, points out that, as Canadians saw recently with the 2017 defence policy review, the “lion’s share” of international policy resources are going towards defence rather than diplomacy and development.

Copeland blames a timid service.

“It’s the department’s fault — they didn’t ask for any money in the budget,” he said.

“There are ways that the department can support the foreign service, either by building up the department’s budget so that they’ve got program money so that they can take initiative, or by applying for new funds to hire more new recruits, and there just hasn’t been any of that.”

Indeed, some view the apparently slow pace of rejuvenation under a more open-handed regime as a sign that the senior leadership of the service has yet to adjust to being let off the leash and is not yet inspiring the ranks to greater ambition.

There is debate, typical of political transitions, about whether senior managers brought in under Harper are the right people for the job.

“I think there’s a big disconnect at the moment between the Trudeau government’s ambitions and the senior levels of leadership in Global Affairs Canada,” Copeland said.

“The folks at the top now are those that got promoted during the Harper years — that means that they were rewarded for stifling dissent, keeping the lid on, muzzling the staff. These are not the people who can deliver an activist foreign policy agenda or bring us the kind of creative, imaginative policy leadership that’s going to be required. It’s a bit like asking a patient that has been on life support and in a coma for 10 years to get up and run a marathon. It just can’t happen.”

“There’s a big disconnect at the moment between the Trudeau government’s ambitions and the senior levels of leadership in Global Affairs Canada.”

The impression of inertia is echoed from inside ‘Fort Pearson.’

One Global Affairs Canada executive who preferred not to be named told OpenCanada the message from the political class has been “very clear about: ‘We want to free you so that you can fly.’”

But, “there’s a hesitation at senior levels of the bureaucracy.”

The executive pointed, by way of example, to everyday issues that seemed like things an assistant deputy minister should be able to address: “So you talk to the ADM, and they’re not sure what authority they now have, and they kind of err on the side of caution.”

“We used to have in this department very strong, sometimes quite eccentric senior officials, like [former Canadian High Commissioner to the United Kingdom] Jeremy Kinsman. These people were not necessarily very by-the-book when it came to all the admin and process stuff, but they had views, opinions, and they helped drive a governmental agenda. I don’t sense that now — I sense that maybe the type of people who have been put in behave as managers more than leaders…kind of more [focused on] process, management, a lot of administration.”

The idea of a focus on process over substance is one that comes up repeatedly in conversation with former members of the service.

Valerie Percival, an assistant professor at Carleton University’s Norman Paterson School of International Affairs, worked for the department early in her career. “Over the years it’s become abundantly clear to me that it doesn’t really matter what you do, it matters how you do it,” Percival said. “It’s all about process, all about oiling the wheels of the machine. It’s not really about tangible results.”

As a result, according to Percival, the individuals who move up through the ranks are those who know how to work the system, rather than those with the most relevant CV.

Not one of us

Percival takes issue with the appointment of senior officials without international experience, pointing out that the current deputy minister of Global Affairs, Ian Shugart — while a respected and accomplished civil servant — has never been a diplomat or served in other capacities internationally. “Living and working abroad improves your analytical skills and heightens your diplomatic abilities. This experience is valued in the diplomatic services of other countries — it should matter to Canada.”

Shugart is a post-Harper appointee, made deputy minister by Trudeau in May 2016, having previously held senior government positions in health and environment portfolios. Speaking to OpenCanada, he offered a spirited defence of the idea that managers without foreign service experience can still make significant contributions to the department.

“I think it is not fair to say that, as a general rule, the department is more focused on process, rather than substance. I have not seen that,” he said. “The world of trade negotiations, the world of multilateral diplomacy — the reality is that these things are, of necessity, process-heavy.”

Shugart emphasized that in a 21st century world, managers who come from various fields or different arms of government can be extremely valuable. “I came to this department knowing from hard personal experience an awful lot about global health. Why? Because I did it,” he said. “I came to this department knowing an awful lot about one of the top current issues, interestingly enough, that the government is facing: climate change. Why? Through hard personal experience in international, multilateral climate change negotiations.”

“I’m not just an import from some other department, as a senior deputy minister. Do I know the details of international diplomacy? No, but I know some things that some people in this department don’t know, and it’s useful for them to have access to that.”

Many foreign service officers place great importance on the time served abroad by those in their senior ranks. Graham is of this school of thought, especially when it comes to leaders understanding the particular kind of lifestyle challenges that come with serving abroad. “What about all of the issues that arise about life in difficult circumstances, problems of kids, problems of spouses?” he asked. “People who have not experienced this — it’s not to say that they’re clowns or indifferent, but it is not the same if you don’t know it.”

Dann said that when she arrived in Sao Paulo in her late 20s, her boss at the time took her under his wing and took an interest in her professional development. “I don’t get the feeling that happens the same [way] anymore,” she said, after observing young officers through her work teaching courses on protocol and networking at the Canadian Foreign Service Institute. “You need people at senior levels who are themselves professional foreign service officers.”

diplomacy

Credit: Sami Chouhdary

The previous service of senior officials aside, there is a perception that excessive caution and lack of imagination have seeped down the ranks of a service whose purpose is meant to be the offering of fearless advice.

Inside 125 Sussex Drive, the executive who asked not to be named says a period of restrained ambition may account for a tendency towards self-censorship that has also affected newer entrants to the service.

“I thought well, maybe it’s because their whole experience in government has been waiting to be tasked with doing something, as opposed to, this is the framework the government has proposed, but now they want the bureaucracy and the foreign service specifically to step forward and find opportunities.”

“But also I think for young people maybe it was that nobody had said to them: ‘Think big, come up with ideas. The worst thing that can happen is it won’t go anywhere, because it just isn’t the right time, or there aren’t resources to support it or whatever.’”

The deputy minister offered a careful response to each of the frustrations expressed by those within and without his department.

“What appears to be a failure to think outside the box is, sometimes, you look at the substance of the issue and the constraints, and there really is very little that one can do. You continue to think about possibilities, and it is true that sometimes people need to be nudged or shoved to think more creatively. I think that’s a tendency that we always have to be alive to.”

Shugart said the burden for shifting the department’s culture onto the front foot ultimately rests with senior managers within the foreign service.

“Sometimes it may be true that the political arm of the government will constrain the policy options,” he said, “but other times, it doesn’t matter what stripe of government it is, it’s the foreign service itself, it’s the bureaucracy, it’s the institution — sometimes vested interests within the institution — that are thinking very conventionally themselves.”

An unattainable ideal

Of course, the sentiment often heard from long-serving officers and retirees that the foreign service needs to return to a more professional body and embrace an ‘elite’ status may in part be a byproduct of the realities of operating in a different, information-saturated world.

For some context, OpenCanada turned to the head of the historical section at Global Affairs Canada, Greg Donaghy, co-author of a new book on the department under Pierre Trudeau. He says that while there “is a small kernel of truth in some of this stuff” — for example, that process is valued over substance — many diplomats are yearning for an environment that doesn’t exist anymore.

“If you go back to the 1940s and 1950s, people made their careers on dispatches from missions and policy briefs. Robert Ford, our guy in Moscow in the 1950s, wrote a series of really compelling reports on the post-Stalin Soviet Union and what Canada and Western policy should be. Mike Pearson read them, they shaped his view, and shaped Canadian policy towards the Soviet Union for a couple decades. That’s the way you made your reputation.”

Nowadays, when emails are sent instantaneously and communications are 24/7, “people aren’t sitting down to read 30-page dispatches anymore,” Donaghy said. “So where does a successful person have an impact? In a committee meeting, moving something up the ladder, being able to adjust new policy prescriptions to the tenor of the times, or shaping policy that meets the needs of the minister, and doing that in a quick briefing note.”

Donaghy recalled that former Canadian Ambassador to the UN Bob Fowler once told him that he made his money “in the 10 minutes from the airport to the meeting.”

“He had the minister or the deputy or the prime minister, and that’s where he’d give his pitch. Process guy. He’s not sitting down the way Robert Ford did, to write a 30-page reflection on the state of poetry in the Soviet Union and what that meant for Canada.”

Who should serve

Aside from differing reflections on how the role of diplomats may have changed over the decades, there is a heated battle underway within Global Affairs over who should serve.

“If you were to look at the department in 1950, it would be 90 percent foreign service officers,” Donaghy said. “That’s simply not the case anymore.”

Indeed, out of a total of 10,020 employees working for Global Affairs Canada, the number of foreign service officers stands at 1,174.

PAFSO, which represents employees with the foreign service, or ‘FS’, designation, has been at loggerheads with management for the past three years over a set of demands that include formally ensuring these staff have priority for assignments abroad.

“What we’re seeing now is that, more and more, non-career diplomats, non-career foreign service officers are filling those positions — the stat is something like 20 percent,” Kologie said. “That’s concerning to us, because the intent of the foreign service was to develop a corps of excellence, where foreign service officers would spend half of their career abroad, come back and go abroad again. When that 20 percent, and it’s creeping up there, is introduced, we’re spending less time abroad. We did an internal survey and foreign service officers have told us 48 percent of them struggled to actually get abroad.”

“Diplomacy isn’t ‘get a smart person, add water and stir.’”

This is partly a turf battle. But it is also a central bone of contention in the running debate about who should serve.

The need for a ‘professional’ foreign service is one Dann brought up many times in conversation. “Diplomacy isn’t ‘get a smart person, add water and stir,’” she said. “There are lots of smart people, for expert files, science behind climate change, etc. — okay fine, get them in on a single assignment or for a period of time, or even to be experts within the larger diplomatic corps. But you need in a country a professionally trained, professionally identified, constant corps of people who are diplomats.”

This view of foreign affairs as the exclusive preserve of a career corps of officers is not shared by the deputy minister, particularly when it comes to the most senior roles.

“I affirm the right, and I would even say the responsibility, of the government of Canada to decide who will be the representative of Canada around the world. Sometimes they make decisions that enrich our capacity around the world, [choosing] people who bring skills and experience and understanding that professional FS officers, brilliant as they may be, will never have to the same degree,” Shugart said.

“Now, the core of our international representation in my view has to be the FS. It’s got to have depth, and it’s got to have breadth of experience, and we’ve got to provide a career path to our foreign service officers. If we want to attract the best, and want to develop and retain the best, we’ve got to be able to provide people with a career path. But that, in my view, does not mean that senior appointments and senior international appointments have to be reserved for foreign service officers,” he added.

This does not just hold true for the senior ranks. Shugart concedes the distinction between a foreign service officer and someone without the FS designation doing foreign work for the department is blurring.

“I think compared to the past it’s true that it’s a somewhat more elastic concept, in that people who come from the development stream or the trade stream or the traditional foreign service, which is more, you could use the synonym ‘diplomats,’ all have access to postings and so on,” Shugart said.

In reality, Shugart said, at Canada’s missions abroad, “people from immigration, the security agencies, the defence attaché, the development team, and so on…are all working together as a team.”

“And while we fully recognize and maintain the, you might call it, business lines or practices of these specialized communities — development and trade and diplomacy — organizationally they are together in one department for the purpose of ensuring that Canada acts with all its instruments in a coherent and coordinated way internationally.”

Boosting morale

When it comes to the foreign service’s esprit de corps, present and former officers aren’t shy about offering up their suggestions for reforms that would, in their view, bolster morale and the service itself. Ideas range from a shift in hiring and promotions practices — reinstating official language training to widen the pool of applicants, increasing job security by relying less on temporary contracts, or making it easier for new intakes to get abroad more quickly, for example — to revisiting the 1973 relocation of the department and moving it closer to the newly renamed Office of the Prime Minister and Privy Council on Wellington Street.

As Percival and others noted, it will be up to the Trudeau government to articulate its foreign policy vision in a way that inspires the foreign service to go deep on substance. A large part of why Axworthy had notable successes as a foreign minister was that he had a very clear idea of what he wanted to accomplish. But day-to-day, enduring changes to the foreign service and the department as a whole will need to come from senior leadership within Global Affairs Canada.

And despite a proliferation of NGOs, think tanks and country experts, the case for personal diplomacy in the 21st century is made convincingly and robustly by those who have seen it at work.

“You can’t bomb Ebola, you can’t call in an air strike on a warming climate, or send out an expeditionary force to occupy the alternatives to a carbon economy,” Copeland said. “Our only chance is to talk our way out of these problems. That’s the province of diplomacy.”

Current Canadian diplomats from Atlanta to Australia would agree. Louise Blais, Canada’s consul general in Atlanta, says that in anticipation of NAFTA renegotiations, her staff has been part of the Trudeau government’s coordinated campaign to utilize policymakers at all levels to emphasize to key American players how closely intertwined the two countries are economically.

“At the end of the day, we open doors for our government…leveraging those personal relationships that we are paid to develop on the ground,” she said. “You look at how they’ve recruited [Brian] Mulroney, but they also have us.”

Blais gave the example of Sonny Perdue, Trump’s secretary of agriculture, who was reportedly instrumental in urging the president not to withdraw from NAFTA. Blais said Perdue is “a good friend to the consulate. We have worked with him closely — just last year, we awarded him the governor general’s award, I have his personal phone number. You can’t buy [that kind of relationship].”

Angela Bogdan, the Canadian consul general to Sydney, said that it’s important for Canada to address any “diplomatic deficit” left over from years of cuts under the Harper government.

She underlines the opportunity embedded in the current historical moment, with heightened uncertainty about an international order that has fewer champions.

“Never before have I seen the Canada brand be so embraced and emulated — this government and this prime minister have really propelled Canada as a brand on the international stage,” Bogdan said.

“This is an incredible opportunity for us to use this to full effect, not just for the sake of prosperity at home, but in terms of promoting the values systems that we hold dear, the kind of inclusive approach to diversity, refugees, tolerance on LGBTI issues…We’ve never been better positioned to advance Canada’s agenda, and we want to have the tools and the resources to use that to full effect.”

**

Though many would say the foreign service, and the department itself, have a ways to go to build themselves back up to the fabled ‘golden age,’ Canada’s diplomatic corps has been constantly recreating itself throughout its short history, and will continue to do so, wherever its headquarters happen to be stationed — whether on Sussex Drive or once again a stone’s throw from Parliament Hill.

Donaghy emphasized that the ‘golden age’ of Canadian diplomacy can refer to various periods throughout the 20th century, depending on who is doing the reminiscing. He noted there are two forces at work when foreign service officers look back wistfully at the past: one is the “spectre of golden-ageism” and the other is a “culture of complaint.”

“I think they’re both true but neither reflects what is actually happening — which is that the department is changing in response to shifts at home and abroad,” Donaghy said.

“The fact that you get these reoccurring golden ages suggests that [the department] is pretty good at doing this, because if it wasn’t, it would be a recurring set of dark ages.”

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